BLOGS: Political GPS: Womble Carlyle Political Law

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Friday, June 19, 2009, 9:58 AM

States Launch Review of Disqualification Standards for Elected Judges

Last week, the Supreme Court ruled that elected judges should not hear cases when the support they received from campaign backers creates an appearance of bias. In the wake of this ruling, a number of states have announced plans to review their rules on judicial disqualification. Michigan, for instance, has requested public comment by August 1 on a series of proposals. Ohio and Wisconsin are preparing to conduct similar reviews. West Virginia has announced the formation of a Commission on judicial reform to be headed by former Justice Sandra Day O’Connor.

The Supreme Court ruling allows states to adopt stricter rules than may be constitutionally required. The ruling also opens the door for states to consider the impact of money spent in judicial races other than through direct contributions to a candidate. In fact, the case before the Supreme Court involved little in the way of campaign contributions, with the bulk of the challenged spending coming through large independent expenditures and donations to a 527 group that favored one of the judicial candidates. A dissenting opinion in the case also raises the possibility that disqualification may be required if large expenditures are made by an industry association, trade union, physicians’ group, or the plaintiffs’ bar.

Another issue to watch is whether states leave disqualification decisions in the sole discretion of the deciding judge. Michigan Supreme Court Justice Stephen J. Markman asks a series of questions for public comment, including whether decisions to disqualify a judge should be made by the judge who is the object of the disqualification request or by another judge. And if it should be heard by another judge, what if that judge campaigned against the judge whose disqualification is sought? Or what if the judge hearing the disqualification request received political support from groups that might be advantaged by another judge’s nonparticipation in a case?

The possible questions are endless. The Supreme Court ruling ensures that for many states, there will soon be answers.


The $80 billion retirement system for Texas teachers, the sixth-largest public pension fund in the country, adopted pay-to-play rules for firms seeking to manage the fund’s investments. As of July 1, 2009, money managers seeking contracts with the fund will have to disclose whether in the preceding three years they have lobbied or communicated with pension board members or elected officials, and whether they have made political contributions to any Texas official. No pension fund investment will be made if an authorized officer of the board determines that a disclosed contact or political contribution "has created an unacceptable risk to the integrity and reputation" of the pension fund.

The announcement by the Texas retirement fund comes as the Securities and Exchange Commission is considering releasing proposed rules to restrict campaign contributions by firms that manage investments for state pension funds. The New York Attorney General has also proposed model rules for limiting contributions to candidates involved in pension fund oversight.


We have chronicled recently a rising number of 3-3 splits on the six-member Federal Election Commission, all along partisan lines. The deadlocks, as we have noted, span a wide range of issues, including political activity by 501(c) and 527 organizations, rules for candidates’ testing the waters, coercion of campaign contributions, and liability for false reports stemming from embezzlement. This week, two of the three Democratic Commissioners admonished their Republican colleagues, who released documents that were being sought through a Freedom of Information Act request. In a written statement, Commissioners, Ellen L. Weintraub and Cynthia L. Bauerly said,

"At a time when we have so many legitimate disagreements over the precise contours of the law, we had hoped this matter could have been resolved by the full Commission according to established procedures, rather than by a group of three Commissioners choosing to preempt those procedures."

Amid rumblings that the Senate Rules and Administration Committee may hold hearings on the reason for so many 3-3 splits, Congress appears poised to confirm labor attorney, John Sullivan, to replace Commissioner Weintraub. The terms of two other Commissioners - Chairman Steven T. Walther and Commissioner Donald F. McGahn II - expired at the end of April, but the law permits them to remain on the panel until a replacement is confirmed.


One of the surprises in last week's new Lobbying Disclosure Act guidance (Political GPS, 6/12/09) issued by the Secretary of the Senate and the Clerk of the House concerns the circumstances when a lobbyist can be removed from a registrant’s list of lobbyists. The guidance said this was permissible when either: (1) the individual’s lobbying activities do not constitute 20% of his time for the client in the current quarter and are not expected to meet this level in the upcoming quarter; or (2) the individual did not in the current quarter and does not reasonably expect in the upcoming quarter to make more than one lobbying contact per quarter.

While the first requirement presented few surprises, the second seemed to contradict the LDA which does not put any time constraint on lobbying contacts. In fact, another section of the same guidance memorandum states that registration obligations arise if the 20% rule is satisfied and the individual makes more than one lobbying contact "even if the second contact occurs in a later quarterly period." The new guidance raised the real possibility that lobbyists could go in and out of registered status, or avoid future registration altogether, by timing lobbying contacts.

Alarm bells sounded! Political lawyers scrambled! What did it all mean? What was the justification for this new interpretation? On June 16, the Secretary and the Clerk addressed the uproar. Now a lobbyist can be removed from the registrant's list when that individual does not "reasonably expect to make further lobbying contacts." Gone is the "per quarter" qualification.

Backtracking no doubt, but the latest revision is not a complete about-face. The prevailing interpretation has been that once a lobbyist has made two lobbying contacts, he may only be "delisted" by falling below the 20% rule in the current or succeeding quarter. Now a lobbyist's reasonable expectation that he will make no further "lobbying contacts," even though he may engage in further "lobbying activities," will allow him to come off the lobbying rolls. For sure, this is a much smaller exception than last week’s guidance would have allowed, but it would appear to be consistent with the wording and structure of the LDA.

On another point, the latest guidance instructs that retroactively terminating a lobbyist by amending a prior quarterly report (LD-2) does not relieve the lobbyist of the obligation to file a personal contribution report (LD-203) for the period in which he remained (albeit temporarily) in active status. This contradicts oral advice that the Secretary's and Clerk's offices have given and which many lobbyists have relied on in determining whether they have LD-203 filing obligations.

These evolving interpretations underscore the difficulty of LDA compliance for the lobbying community and the need for vigilance in reviewing Congressional guidance. Even the Secretary and the Clerk acknowledge on the very first page of the guidance that they do not have authority under the LDA to issue "definitive opinions" on the interpretation of the law. Our advice – tread carefully.


We will be presenting a webinar on pay-to-play laws on Thursday, June 25 from 12 Noon to 1 PM. You can find more information about the webinar and register at this link. Our next edition of Political GPS will be published the week of June 29.

Friday, June 12, 2009, 10:34 AM

New Role For Election Lawyers in Litigation: Supreme Court Disqualifies Judge Based On Campaign Support

The Supreme Court ruled on June 8 that an elected judge was constitutionally barred from taking part in a case where one of the parties spent a large sum to get the judge elected. (Caperton v. A.T. Massey Coal Co.). The ruling will bring new scrutiny to cases heard by elected judges and may spawn a wave of efforts to keep elected judges from hearing cases tied to their supporters.

An interesting aspect of the case is that it involved only a small amount in direct campaign contributions. Don Blankenship, president of a coal company, contributed $1,000, the statutory limit, to Brent Benjamin, a candidate for a West Virginia appeals court. That court would soon hear the appeal of a $50 million jury verdict against Blankenship’s company. Blankenship also donated almost $2.5 million to a 527 organization that supported Benjamin and spent another $500,000 on independent expenditures – direct mail, television, and newspaper ads. Benjamin was elected, and later cast the decisive vote in a 3-2 ruling that reversed the verdict against Blankenship's company.

While the five-member majority called the facts of this case "extreme by any measure," Justice Scalia, in dissent, warned, "Many billable hours will be spent in poring through volumes of campaign finance reports, and many more in contesting nonrecusal decisions through every available means." Scalia predicts that the Court's opinion will add "to the vast arsenal of lawyerly gambits what will become known as the Caperton claim."

Justice Roberts, also writing in dissent, listed 40 questions that he said the majority left unanswered. For instance:

  • "How much money is too much money? What level of contribution or expenditure gives rise to a 'probability of bias'?"
  • "Are independent, non-coordinated expenditures treated the same as direct contributions to a candidate's campaign?"
  • "What if the "disproportionately" large expenditure is made by an industry association, trade union, physicians' group, or the plaintiffs' bar? Must the judge recuse in all cases that affect the association's interests? Must the judge recuse in all cases in which a party or lawyer is a member of that group? Does it matter how much the litigant contributed to the association?"
  • "What if the case involves a social or ideological issue rather than a financial one? Must a judge recuse from cases involving, say, abortion rights if he has received "disproportionate" support from individuals who feel strongly about either side of that issue? If the supporter wants to help elect judges who are "tough on crime," must the judge recuse in all criminal cases?"

This case may affect a broader and intensifying debate over the wisdom of electing judges. Nearly 40 states elect at least some of their judges. As for predictions that this case will trigger a wave of recusal motions, that may depend on how lower court judges respond to the first round of such claims.


On June 9, the Secretary of the Senate and the Clerk of the House issued important new Lobbying Disclosure Act guidance.

Some changes affect the semi-annual report (LD-203), which must be filed separately by individual federal lobbyists and their employers (LDA registrants) each January and July. The new guidance clarifies when a filer must report campaign contributions and other disbursements relating to events and organizations associated with covered officials:

  • Registrants and lobbyists need not report contributions to state and local candidates and political committees that are not registered with the FEC, nor do they need to report payments for "non-preferential" sponsorship of multi-candidate debates.
  • The costs of a reportable event include only direct costs, such as hotel and food expenses, but not indirect costs, such as host staff salaries.
  • Payments to vendors for reportable events can be aggregated and a lump sum amount reported as "various vendors."

The Secretary and the Clerk have also provided much-needed guidance on the reporting of payments to entities "established, financed, maintained or controlled" by a covered official. Under the new guidance, a covered official who is a non-voting board member does not "control" that organization. Also, a charitable organization established by a person before he or she becomes a covered official is not considered to be "established" by the official, if he or she has no relationship to the organization after becoming a covered official. And a covered official's de minimis contribution to a charity is not, standing alone, indicative of that person's financing, maintaining, or controlling the organization. Additional facts may, however, require reporting of such charitable contributions.

While these benchmarks are welcome, they may raise as many questions as they answer. For instance, if a non-voting board member does not control the organization, why does the guidance view a non-voting PAC board member as controlling that entity? What does it mean to have "no relationship" with an organization? What other facts in addition to a de minimis contribution would be indicative of financing, maintenance or control? We'll have to wait for those answers.

Finally, the Congressional guidance clarifies that lobbyists can only be terminated by the registrant by completing Line 23 of LD-2. Amending the LD-1 or LD-2 to delete a lobbyist listed on lines 10 or 18 is not a proper method of termination.


The Obama Administration says that federal law prohibits state or local restrictions on competition for federally-funded contracts, including pay-to-play laws that restrict campaign contributions by contractors and their principals. According to story in The Hill, Jeffrey Paniati, acting deputy administrator of the Federal Highway Administration, wrote: "However laudable the goals of such State laws, they have the effect of limiting competition in the awarding of Federal-aid highway contracts."

The Administration's position sets up a conflict with up to 20 states that have pay-to-play laws at either the state or local level. For instance, Ohio's Legislative Inspector General recently issued a statement, reminding prospective contractors that once the state receives federal funds under the American Recovery and Reinvestment Act of 2009, the distribution of those funds through state channels means that Ohio's lobbying laws apply. Under Ohio law, lobbying includes efforts to influence executive agency decisions regarding the expenditure of funds, award of contracts, and regulatory decisions. New Jersey officials are also seeking legislation that would expressly apply the state's strict pay-to-play laws to the state’s distribution of federal stimulus funds.


John J. Sullivan, President Obama's nominee for the Federal Election Commission, encountered light questioning during a confirmation hearing this week before the Senate Rules and Administration Committee and was approved by the Committee by voice vote on Thursday night. Sullivan is an attorney with the Service Employees International Union (SEIU), and has been involved in election administration issues. The nomination now goes to the full Senate, and Rules Committee Chairman Charles Schumer says that he expects a quick confirmation. Sullivan would replace Commissioner Ellen L. Weintraub. Both are Democrats.

In the meantime, the FEC has deadlocked yet again, this time on a matter involving a committee's failure to provide names and employer information for nearly 90% of individual contributors. A written statement issued by Commissioners Weintraub and Cynthia L. Bauerly says that the errors consisted largely of reporting "self" as both employer and occupation.

It is unclear why the FEC dropped the case, even after the respondents agreed to pay a civil penalty. The three Republican Commissioners, who voted against approving the settlement, have yet to issue their own statement. Commissioners Weintraub and Bauerly say of the dismissal, "This may be the most inexplicable resolution of [an enforcement matter] that we have seen during our combined tenures on the Commission." Weintraub joined the FEC in December 2002. Bauerly joined the FEC in June 2008.

Thursday, June 11, 2009, 3:20 PM

Webinar on Pay-to-Play Updates: Campaign Contributions and Other Political Activities Pose Risks for State and Local Contractors

In the last few years, there has been a proliferation of state and local laws barring or severely limiting campaign contributions by companies doing business with government agencies. Just one prohibited campaign contribution by a contractor, its officers or executives, or other related individuals can lead to the immediate severing of existing contracts, disqualification of bids, fines, and even criminal penalties.

Now, more than ever, it is critical to understand the risks posed by pay-to-play laws - especially as billions of federal stimulus dollars are distributed through states and localities. Many organizations - some for the first time - are seeking government contracts to take advantage of this massive spending program.

Whether your organization is a novice or an experienced contractor, this timely webinar on June 25th, from 12:00-1:00 p.m. (Eastern Time), will demystify the pay-to-play laws and arm you with practical tips and best practices. You will also learn about other potential pitfalls facing government contractors, including the growing trend of regulating government contract sales professionals as lobbyists, special gift restrictions on contractors and bidders, and new limits on lobbying for federal stimulus projects.

There is no charge to attend this webinar, but space is limited. To register for this event, please click here.

About the Presenters
Larry Norton and Jim Kahl head Womble Carlyle's Political Law Practice. They represent corporations, trade associations, non-profit organizations, and others in connection with campaign finance, lobbying, and gift laws. Prior to joining Womble Carlyle, Larry and Jim served as General Counsel and Deputy General Counsel, respectively, of the Federal Election Commission from 2001-2007. Larry and Jim are authors of Womble Carlyle's Political GPS Blog.

Tuesday, June 2, 2009, 10:15 AM

White House Expands Restrictions On Stimulus Lobbying

Late last Friday, through the unusual vehicle of a blog entry, the White House ethics counsel announced that restrictions on oral communications about Recovery Act projects now apply not just to federally-registered lobbyists, but also to unregistered lobbyists, "as well as anyone else exerting influence on the process." In March, the White House barred federal lobbyists from communicating with agency officials, in person or by phone, regarding particular Recovery Act projects.

Friday's announcement also establishes a window during which oral discussions about Recovery Act projects are prohibited. That window begins when grant applications are submitted and ends when awards are made.

The latest announcement indicates that agencies will still be required to post on their websites certain communications received from registered lobbyists. Under the White House's March directive, officials were required to publish (or summarize in writing) on agency websites two kinds of permissible communications from registered lobbyists: (1) written comments about specific Recovery Act projects and (2) oral communications about Recovery Act "policy issues" that do not "touch upon" particular projects. Under Friday’s guidance, it’s not clear whether oral communications with lobbyists about particular projects must be made public, even if they occur prior to the receipt of grant applications, or whether the publication requirement now pertains only to communications about Recovery Act policy.

Other matters are also left unresolved by White House counsel's blog post. For example, the new guidance is silent as to what kinds of oral communications with agency officials would not involve "exerting influence" on agency officials, meaning that such communications could occur even after competitive grant applications are received. Likewise, Friday's guidance does not indicate whether the restrictions on oral communications apply only when persons are acting on behalf of an applicant for Recovery Act funds. It is also not clear whether the ban on oral communications is triggered by a party's own application or by the submission of an application by any grant competitor. Finally, the blog post does not say whether the revised guidance is immediately in force or will take effect only after the publication of more "detailed guidance," which the White House counsel says is coming.

Political GPS will continue to follow these developments and update readers as additional information is available.

If you have any questions, comments or would like to schedule a consultation, please feel free to contact Larry (email, (202) 857-4429) or Jim (email, (202) 857-4417).

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